Editorials

Don't undo good work on unemployment system

Lawmakers should be careful not to unravel a carefully stitched recovery plan for the state's unemployment system.

An important seam in that plan is a new schedule of unemployment insurance premiums businesses must pay. The schedule better reflects the impact businesses have on the unemployment fund.

Under the new schedule, cost per worker ranges from about $10 for companies with the best records for maintaining a stable work force to $1,128 for companies with the worst records.

Under the old system, companies paid between $87 and $427 a year per employee.

Businesses were notified earlier this year about the new rates, and it didn't take long for those hit the hardest to cry foul.

Their complaints aren't surprising; the system worked in their favor for many years.

State Sen. Greg Ryberg, chairman of the Senate Labor, Commerce and Industry Committee, is right to balk at changing rates that reflect the demand employers put on the system.

Businesses complaining about the rate increases, he said, are asking businesses with better records to subsidize their unemployment costs.

We should have a system that is fair and fiscally sound. South Carolina owes $933 million in federal loans and must restore a trust fund that has been emptied. It's a nearly $2 billion gap that must be filled to get us on stable footing.

This isn't a problem born of the recent recession. South Carolina had a more than $800 million surplus in its unemployment benefits trust fund in 2000. When the recession began in 2008, that number had dropped to $229 million.

An audit of the old Employment Security Commission found that its officials knew as early as 2001 that fund reserves were not adequate to meet the demand for unemployment benefits, but they didn't pursue changes to benefits or the tax structure to prevent insolvency.

The audit also found that the agency didn't give the General Assembly adequate information about the declining trust fund balance or suggest ways to prevent the decline.

The overhaul that resulted in the Department of Employment and Workforce, a new cabinet level agency, also tightened the rules on who qualifies to receive unemployment benefits.

Workers who leave their jobs voluntarily or are fired for illegal drug use now are ineligible for benefits. They also can be denied benefits for gross misconduct, which includes reckless damage to employer property, employee theft, and criminal assault or battery against a fellow employee.

Lawmakers are looking for ways to reduce costs to be able to bring down the costs for employers. One idea is to pay interest only on the federal loans, thus reducing the state's costs and allowing rates to be cut, The Greenville News reports.

Another idea is to cut the highest rate by $145 while increasing the lowest rate by $110. Still another is to cut rates and then sell $261 million in bonds to make up the difference. Lawmakers should pass on that one.

The new rate schedule makes sense. The old system clearly wasn't working.

Lawmakers should give the new system a chance before changing a key component.

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